Der Spiegel Calls on Greece to Default Because the Bailout Was a Failure

August 17, 2012 • 1:10PM

Germany's leading news weekly, Der Spiegel declared that the Greek bailout policy is a total failure and that therefore, Greece should be allowed to default and be free to have a fresh start.

Der Spiegel: "If it was ever the goal of Merkel and her allies to rescue Greece from bankruptcy, then they have failed. The only thing the drastic austerity measures have done is to exacerbate the economic crisis and push Greece's debts even higher. Nevertheless, the creditors have insisted on moving forward with their plan — even though it already became clear long ago where it was heading... The end of this approach now appears to have been reached. Neither euro-zone countries nor the IMF can provide Greece with more aid without sacrificing their own credibility. Given these circumstances, there is only one option left: Greece must go broke."

The magazine writes that European leaders continue to play for time, but, "the new permanent bailout fund, the European Stability Mechanism (ESM), which is supposed to cushion the economic impacts of a Greek bankruptcy, has yet to be in force," implying that it may never.

While a Greek bankruptcy could cost Germany 80 billion euros, writes Spiegel, "Lest this figure climb any higher, the right thing to do would be to finally make that one fateful step. No matter how unpredictable the consequences of a Greek bankruptcy might be, it appears to offer the only chance to resolve the messy situation. In this way, Greece would be free of its debts and would have a chance to make a fresh start — either as part of the euro zone or not. And the creditors in Berlin and Brussels could finally free themselves from the spiral of threats and rescue actions that they have gotten themselves into."